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Home My WebLink AboutItem 5: Beam Development Project Extension EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Action: Beam Development Project Extension Meeting Date: May 26, 2009 Agenda Item Number: 5 Department: Planning & Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 682-5536 ISSUE STATEMENT The Urban Renewal Agency (URA) and Beam Development signed a Purchase and Sale Agreement (PSA) in May 2008, for Beam’s purchase of the Centre Court building and adjacent vacant parcel, and the Washburne Building (the Properties). The PSA includes a requirement that Beam begin construction of the project no later than May 31, 2009. The URA is asked to consider Beam’s request to extend the time for the start of construction. BACKGROUND Beam purchased the Properties from the URA in July 2008, for a total purchase price of $3.6 million (Centre Court $1,946,000, vacant parcel $454,000, and Washburne Building $1,200,000). The URA provided financing to Beam totaling $3.55 million for their acquisition of the Properties. The sources of funds for the URA’s financing included HUD Section 108 loan funds ($2.7 million), Brownfield Economic Development Initiative (BEDI) grant funds ($440,000), and Downtown Revitalization Loan Program funds ($404,000). To date, Beam has made payments as agreed. The PSA includes a provision that construction of the project would begin no later than May 1, 2009, with a provision for up to an additional 30 days, if necessary, due to events or circumstances beyond Beam’s reasonable control. The agreement requires Beam to provide written notice of the extension no later than April 15, 2009, with a statement of the reasons they wish to extend the commencement date. On April 10, 2009, Beam provided written notice of the 30-day extension, citing circumstances related to the economy, including the tight lending market, elevated pre-leasing commitments required by lenders, longer lease-up periods experienced in the market, and uncertainty regarding their previously anticipated historic tax credits. (The letter is included in Attachment A.) In Beam’s request for additional time, they indicated that they are in discussions with a major tenant and would like the URA to consider an extension of the construction commencement date for an additional six months to complete the necessary due diligence. Last week, Lane Community College (LCC) announced that their board directed the President to proceed with formal discussions with the City to explore alternative downtown locations for the new Downtown Center. The location of LCC at Broadway and Willamette Street has the potential to support the vision for a signature building at the intersection of Broadway and Willamette Street, enhance activity in the heart of downtown, support affordable, lifelong educational opportunities, and demonstrate the community’s commitment to sustainable development. Beam has shown strong interest in working with LCC and has provided a Z:\CMO\2009 Council Agendas\M090526\S0905265.doc summary of steps they propose to take to move the project forward. (See Attachment B - letter from Beam). Because discussions with LCC are preliminary, an extension of time in the PSA is necessary for Beam and the URA to further investigate the LCC opportunity. In addition to an extension of time, and in light of council discussions on the City Hall building, a new police facility, and other possible City office space scenarios, the City and Beam are discussing the current tenant commitment included in the PSA. Based on the current PSA terms, the City has committed to lease up to 50,000 square feet in a newly constructed building on the vacant parcel. There could be more flexibility in the agreement regarding the City’s commitment in order for the City to expand its opportunities. However, the City recognizes tenancy is an important issue for this project and wants to remain as supportive as possible, while also maintaining the City’s flexibility. The removal of the lease commitment would not preclude the City from leasing space from Beam in the future and we will continue to discuss the potential of adding flexibility into the PSA as part of this amendment. RELATED CITY POLICIES The proposed redevelopment along West Broadway is consistent with the policies and implementation strategies included in the Downtown Plan, including: ? Downtown development shall support the urban qualities of density, vitality, livability and diversity to create a downtown, urban environment. ? Actively pursue public/private development opportunities to achieve the vision for an active, vital, growing downtown. ? Use downtown development tools and incentives to encourage development that provides character and density downtown. ? Promote multi-story, mixed-use structures downtown through financial incentives or code amendments. ? Stimulate multi-unit housing in the downtown core and on the edges of downtown for a variety of income levels and ownership opportunities. ? Provide and promote development and community events that reinforce downtown’s role as the cultural center for the city and region. ? Reinforce the creative, distinctive culture of downtown as the arts and entertainment center of the city. In addition, the proposed development project is responsive to the following Growth Management policies: Policy 1: Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use existing vacant and under-used land within the boundary more efficiently. Policy 2: Encourage in-fill, mixed-use, redevelopment, and higher density development. Policy 3: Encourage a mix of business and residential uses downtown using incentives and zoning. Policy 10: Encourage the creation of transportation-efficient land use patterns and implementation of nodal development concepts. Z:\CMO\2009 Council Agendas\M090526\S0905265.doc Policy 14: Development shall be required to pay the full cost of extending infrastructure and services, except that the City will examine ways to subsidize the costs of providing infrastructure or offer other incentives that support higher-density infill, mixed use, and redevelopment. COUNCIL OPTIONS 1.Direct the Agency Director to 1) amend the PSA to extend the required start of construction date by six months to December 1, 2009; 2) negotiate with Beam to provide flexibility in the PSA, if possible, in the City’s commitment for leased space, and if negotiations are successful to amend the PSA without additional approval from the URA, and 3) continue discussions with Beam and LCC regarding the possibility of locating a new LCC Downtown Center on the Beam property. 2.Direct the Agency Director to 1) amend the PSA to extend the required start of construction date by six months to December 1, 2009, and 2) continue discussions with Beam and LCC regarding the possibility of locating a new LCC Downtown Center on the Beam property. 3.Direct the Agency Director to not extend the required start of construction date in the PSA and determine next steps. AGENCY DIRECTOR’S RECOMMENDATION The Agency Director recommends that 1) the PSA be amended to extend the start of construction date by six months to provide the time necessary for discussions with Beam and LCC to proceed and 2) the City negotiate with Beam to provide flexibility in the PSA, if possible, in the commitment for leased space to allow for greater flexibility as the City considers space needs, and if negotiations are successful to amend the PSA without additional approval from the URA, and 3) discussions with Beam and LCC continue regarding the possibility of locating a new LCC Downtown Center on the Beam property. SUGGESTED MOTION Move to direct the Agency Director to 1) amend the PSA to extend the required start of construction date by six months to December 1, 2009, 2) negotiate with Beam to provide flexibility in the PSA, if possible, regarding the City’s commitment for leased space, and if negotiations are successful to amend the PSA without additional approval from the URA, and 3) continue discussions with Beam and LCC regarding the possibility of locating a new LCC Downtown Center on the Beam property. ATTACHMENTS A. April 10, 2009, Letter from Beam Development B. May 7, 2009, Letter from City Manager C. May 12, 2009, Letter from Beam Development FOR MORE INFORMATION Staff Contact: Denny Braud Telephone: 682-5536 Staff E-Mail: denny.braud@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090526\S0905265.doc